Thinking about starting a non-profit organization in Singapore? These organizations may also be called company limited by guarantee, and would be the most appropriate business structure in Singapore. A public company limited by guarantee comes with multiple exceptional benefits.
This article explores what a company limited by guarantee entails in Singapore, as well as its accompanying features, requirements, and benefits. Most importantly, though, we’ll walk you through the entire process of setting up a company limited by guarantee in Singapore.
What is a Company Limited by Guarantee?
First of all, it is worth noting that there are three primary types of companies in Singapore. You could either incorporate a sole proprietorship, a limited liability company (LLC), or a partnership.
A public company limited by guarantee falls within the second group of incorporations (LLCs) that a company limited by guarantee falls in Singapore. And according to the Singapore Companies Act, a company limited by guarantee is essentially a non-profit organization that carries out activities of public interest.
Another term for such a corporation is CLG. And examples include charities, societies, and clubs. The Accounting and Corporation Regulatory Authority of Singapore (ACRA) allows both citizens and foreigners to set up a CLG in Singapore. Plus, it grants them several outstanding benefits, which happen to set CLGs apart from the rest of the Singapore companies.
Why Set Up a Company Limited by Guarantee?
Main Features of a CLG in Singapore
Registering companies limited by guarantee in Singapore means you get the privilege of separating the company’s liabilities from your own personal obligations. ACRA recognizes all CLGs in the country as distinct legal entities that exist autonomously. As a separate legal entity, the CLG is completely distinct from your own personal assets and debts.
However, unlike other limited entities in Singapore, a CLG doesn’t come with a share capital. Instead, your liability as a member of a CLG in Singapore will be limited to your contribution amount. You’ll notice that ACRA requires all CLG applications to be accompanied by company constitutions that state the amount guaranteed by each member.
Overall companies limited by guarantee would not be the best fit if you need payouts through dividends. ACRA completely bars you from distributing any form of returns between the members of a CLG in Singapore. These companies act purely for social or religious welfare, and are engaged in only non-profit making activities.
But, don’t get us wrong - companies limited by guarantee may still generate revenue. The only thing is, you’ll subsequently be required to spend the income in the company’s non-profit operations. There are still many exceptional perks that could draw you towards a CLG in the country.
Pros/Benefits of a Company Limited by Guarantee Singapore
- All the surplus funds you generate from the company’s members are exempted from corporate income tax.
- The company’s members can guarantee as low as S$1.00 during incorporation.
- The company doesn’t come with share capital obligations.
- All the members’ personal assets are protected from the company’s liabilities. Any debts incurred along the way can only be recovered from the company’s assets.
- You can have as many members as you want. There are no membership limits for a CLG in Singapore.
- A CLG is allowed to apply for charity status within three months of incorporation.
- Membership is open to corporate entities, as well as foreign and local individuals.
How to Set Up a Company Limited by Guarantee in SG
Documents and Requirements of a Company Limited by Guarantee in Singapore
To incorporate a CLG in SG, ACRA requires the following in your application:
- A constitution (also known as Memorandum and Articles of Association) that explicitly states all the company’s bylaws, as well as the members’ guaranteed amounts.
- A declaration of the company’s objectives. This is the part of the constitution that explains what you intend to achieve with the company.
- A unique company name.
- At least three governing board members, two of whom should be residing in Singapore.
- At least one member.
- An explicit statement of the members’ limited liability.
- A registration fee of $300.
The Application Procedure of a CLG in SG
Non-profit organisations in Singapore may enlist for legitimacy, and gain corporate status as a distinct legal entity. Registration is overseen by the Accounting and Regulatory Authority, and are subject to similar requirements and regulations as private companies. Here’s a step-by-step procedure of registering a CLG in SG:
- Go to ACRA’s BizFile+ and start by applying for a new company name. Choose a unique one and reserve it for S$15.
- Using the reserved company name, proceed to the local company incorporation section of the website and apply for a CLG. The total cost here should be S$300.
- Attach all the required documents, including the company’s constitution and address, as well as the personal details of all the members, plus a liability statement.
- The subsequent approval process should take about 15 minutes to 14 days. ACRA will get back to you once it reviews all the submissions.
- In the meantime, you could go ahead and apply for the company’s operating licenses through the official License One website.
- If you’re trying to set up a charity, you should apply for charity status through the Commissioner of Charities within three months of incorporation.
What Should You Do After Setting Up a CLG in SG?
Registration and incorporation is just the first step. For non-profits to legitimize as limited by guarantee companies, they must follow up with the regulations set by ACRA. There’s so much more to running and maintaining a CLG. In essence, you’ll be required to:
- Appoint a company auditor within three months of incorporation.
- Appoint a company secretary within six months of incorporation.
- File the company’s tax returns every year on the 15th of December.
- File the company’s yearly returns with ACRA in the seven months that come after the end of the financial year
- Apply for GST (Goods and Services Tax) if the company’s taxable goods and services stretch beyond S$1 million annually.
- Conduct annual general meetings and company audits.
Where to Start
And there you have it. The basics of setting up a CLG in Singapore.
It’s worth noting, however, that we’ve barely scratched the surface here. You’ll soon discover that there are way more intricate compliance requirements when you dive into the various types of Singapore CLGs.
No cause for alarm though. You don’t have to familiarize yourself with all that. Rather, you can start off by seeking professional assistance from WealthBridge. Our team of corporate and legal experts will help you incorporate your company in Singapore, as well as apply and maintain the subsequent compliance measures.